Refinance

Refinance

Borrowers typically refinance their property when their mortgage comes up for renewal or they have a significant life event and need to break their mortgage to access funds. At this time borrowers need to consider what their needs are and how their situation has changed from the time of purchase.

What is a mortgage refinance?

Refinancing is when you replace your existing mortgage with a new one. Typically done to change the terms and conditions such as a lower rate, shorter amortization, etc. The purpose of a refinance can be for a multitude of reasons, anything from accessing equity in your home for renovations, or simply consolidating debt.

Reasons to refinance

Interest rate: One of the most common reasons to refinance is to secure a lower interest rate. This can save you years off your mortgage and can help with your monthly cash flow. This is particularly attractive when interest rates have dropped since the original mortgage was taken out.

Debt consolidation: Another top reason to refinance is to consolidate your consumer debt into one payment. Credit cards and other consumer debt carry a higher interest rate so combining those debts into your mortgage at a lower rate can save you money and make your finances more manageable.

Equity take out: An equity take out is when you want to access a large chunk of money from your home and use those funds for a large purchase such as tuition for your kids or investments.

Switching to a prime lender: Changing from a private mortgage to a B lender or even better an A lender can be exactly what you need to help your financial situation. With improved credit and/or income this can be done with the help of our experienced mortgage professionals.

Considerations:

• Will I have to pay a prepayment penalty? If you break your mortgage early chances are you will incur a penalty. Sometimes even with factoring in a penalty it is still beneficial to break the mortgage and refinance.
• Accessing the equity in your home now reduces the equity you have built up, leaving you less equity down the road.
• Are there any liens or security interests registered on title? Anything registered on title behind your mortgage can interfere with your refinance. Be sure to know what is registered on title first.
• If you have a collateral charge mortgage your other products may be affected such as your line of credit portion.